April 18, 2013--Blackstone Group LP's $450 million purchase of
the leasehold interest in the Hyatt Regency Waikiki Beach Resort &
Spa would expand the Hawaii portfolio of one of the isles' largest
hotel owners and could increase buyer interest in the state's
hospitality assets.

The pending transaction, first reported by Real Estate Alert,
would double Blackstone's holdings in Waikiki, the state's top
performing hotel market, which realized an average 89.1 percent
occupancy rate during the first two months of this year and saw its
average daily rate climb to $208.83.

The deal could be completed in July with Blackstone investing
an added $80 million to upgrade the 1,230-room property, Bloomberg News
reported. The 37-year-old Hyatt Regency includes three levels of retail
space known as the Pualeilani Atrium Shops and restaurants.

Peter Rose, a spokesman for New York-based Blackstone, did not
return a call from the Star-Advertiser.

Jerry Westenhaver, Hyatt Regency Waikiki Beach Resort &
Spa general manager, said he could not confirm or deny any ownership
changes. However, Westenhaver did say that if they occurred it would
not affect property management.

"We have a long-term contract and we'll be here way past the
time that you and I are living for sure," he said. "We've talked to
staff and made them aware that Hyatt is not going anywhere."

The resort's potential new owner made its first big splash in
Hawaii in 2005 with the purchase of two neighbor island properties, the
Marriott Waikoloa Beach Resort and the Marriott Wailea Beach Resort. In
July 2007, Blackstone significantly expanded its local interests with
the $26 billion purchase of Hilton Hotels, which included the Hilton
Hawaiian Village Waikiki Beach Resort, the state's single-largest
resort property and the Hilton Waikoloa Village. Given the strong hotel
fundamentals in Waikiki, it's a surprise to few that the private equity
giant has now set its sights on the state's top performing Hyatt, a
well-positioned property on Kalakaua Avenue.

"There's an incredible amount of interest in Hawaii right
now," said Joe Toy, president and CEO of hotel consultancy Hospitality
Advisors LLC. "The hotel investment market is very active. We saw some
acceleration last year and it's continuing. This should prove to be a
very interesting year."

Toy said this latest Hyatt transaction, which works out to
about $366,000 per room, is significant although it falls short of the
state's high-water mark, which was roughly $1.2 million per room for
the Four Seasons Resort Hualalai on Hawaii island in 2006.

Still, the Hyatt sale is easily one of the largest
transactions since the economic downturn and if it closes would bring
even greater improvement to the state's commercial real estate
investment cycle, said Mike Hamasu, director of consulting and research
at Colliers International.

"If it's a legitimate deal and it ... puts us on track to hit
2012 levels," Hamasu said, "my guess is that by the end of 2013, we'll
be at $2.4 billion or $2.5 billion" in commercial real estate sales.

While commercial real estate investment, including the
heated-up hotel market, is well below the record $4.3 billion attained
in 2006, Hamasu said savvy players like Blackstone bring additional
credence to Hawaii investment.

"It's positive that you've got this major player saying that
they want a bigger share of the hotel rooms in Hawaii," he said. "The
perception alone could bring greater appreciation to the state's
top-tier hotels."

To be sure, Unite Here Local 5, which represents union workers
at the Hyatt Regency Waikiki Beach Resort & Spa, estimates that
Blackstone already has interests in 5,738 hotel rooms in the state,
outpacing the next largest owner Cerberus Capital Management/Kyo-ya
Hotels & Resorts by more than 900 rooms. If Blackstone acquires the
ground lease from majority owner Goldman Sachs Group Inc.'s Whitehall
real estate funds unit and Hyatt Hotels Corp., part owner and property
manager, it would add more than a thousand rooms to its major Hawaii
hotel interests.

"That's not necessarily a good thing for Hawaii," said Local 5
Spokesman Cade Watanabe. "The proliferation of private equity firms as
hotel owners is negatively impacting hotel workers and the community.
The trend concerns us whether it's Blackstone, Goldman Sachs or
Cerberus."

For instance, in the years after Goldman Sachs' 2008 Hyatt
purchase, the number of union workers dropped from about 550 to about
480, Watanabe said. About 100 union jobs also have been lost at Hilton
Hawaiian Village since Blackstone's 2007 arrival, he said.

"It's all about maximizing profits," Watanabe said, adding
that equity firms like Blackstone are known for "buying, tweaking and
selling."